PROJECT NO. 27736 RULEMAKING ON ALLOWABLE
FEES AND RATES OF
INDEPENDENT ORGANIZATIONS
§
§
§
§
PUBLIC UTILITY COMMISSION
OF TEXAS
ORDER ADOPTING AMENDMENTS TO §25.362 AND NEW §25.363 AS APPROVED AT THE OCTOBER 9, 2003 OPEN MEETING The Public Utility Commission of Texas (commission) adopts an amendment to §25.362,
relating to Electric Reliability Council of Texas (ERCOT) Governance, and new §25.363,
relating to ERCOT Fees and Other Rates, with changes to the proposed text as published
in the August 8, 2003 edition of the Texas Register (28 TexReg 6172). The amendment
and the new section are adopted under Project Number 27736. The new rule establishes
the manner in which ERCOT will maintain its accounts and records, the appropriate
expense components to be included in ERCOT's fees and rates, and the method of
calculating those rates. The amendment adds related reporting requirements concerning
ERCOT expenditures and long term operating plans. Prior requests for fee changes have
been conducted by the commission on an ad hoc basis, addressing issues as they arose in
those cases. Based upon its experience in those cases, the commission has decided to
standardize the information that is required to review the reasonableness and sufficiency
of ERCOT's fees. Additionally, the commission has determined that additional reporting
by ERCOT is needed for the commission to remain informed about changes in ERCOT's
revenues and expenses during the time between fee change applications.
By
implementing these new reporting requirements and providing more specificity in the
elements considered in reviewing ERCOT's fees, the new rule and the amendment will
PROJECT NO. 27736
ORDER
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make commission oversight of ERCOT and the review of its fees more efficient and
effective and will facilitate participation by interested persons in reviewing ERCOT's
fees. The commission finds that these rules will support the public interest by providing
greater regulatory certainty, increasing the efficiency of the commission's review process
and helping to maintain reasonable fees for ERCOT's services.
In addition, the commission, under a separate order, also adopts a new procedural rule,
§22.252 (relating to Procedure for Approval of ERCOT Fees and Rates). The new
procedural rule is being published separately, but was adopted as part of Project Number
27736.
The commission staff conducted a public hearing on these sections on September 10,
2003. Although public comment was invited, no person provided comments at the public
hearing.
The commission received written comments on the proposed sections on August 29, 2003
from Reliant Resources, Inc. (RRI) and ERCOT. Reply comments were submitted by
ERCOT. All comments, including any not specifically referenced herein, have been fully
considered by the commission. The commission has made other minor modifications for
the purpose of clarifying its intent and for format or grammatical purposes.
PROJECT NO. 27736
ORDER
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§25.362 Electric Reliability Council of Texas (ERCOT) Governance
§25.362(h)(2), Quarterly reports
ERCOT found this provision confusing, contending that it was unsure what information it
would be required to provide in the quarterly reports.
ERCOT suggested that the
language should be revised to require it to provide an accounting of budgeted and actual
revenues and expenses with an explanation of any significant variances and that only the
fourth quarterly report should include a report on the expected use of any unexpended
funds.
Commission response
ERCOT's proposed revision to truncate the reporting requirement by requiring it to
provide an accounting of budgeted and actual revenues and expenses with an explanation
of any significant variance is unacceptable.
ERCOT's proposal would prevent the
commission from obtaining necessary information about ERCOT's assets and liabilities,
as contained in Attachment A – Standard Chart of Accounts of the fee-filing package.
This would reduce the commission's ability to monitor ERCOT's accounting and
financial condition during the time between fee changes. In addition, the commission
declines to accept ERCOT's proposed revision that would require it to only provide an
explanation for significant variations between budgeted and actual revenues and
expenses. The commission finds that it is important to monitor the changes in timing and
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ORDER
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amounts of expenditures and accounts that deviate from their original budgeted amounts,
not just "significant" changes in those amounts.
The commission agrees with ERCOT that during the first three quarters of the budget
year it would not be useful to report the expected use of funds in the subsequent year. A
report should only be required when funds are not expended within the year budgeted.
Since funds not expended in one quarter may be subsequently expended in a later quarter
during the same year, requiring such a report on a quarterly basis would not provide
meaningful information.
A report on the use of unexpended funds should only be
required for the fourth quarter. The commission modifies the language of the rule on this
point.
§25.362 (k), Long-term operations plan
RRI commented that a long-term operations plan would require ERCOT to expend
additional costs, time, and labor to provide information that is repetitive of the guidelines
and the general descriptions contained in existing statutes, by-laws, and protocols. RRI
further noted that the plan would require a long-term forecasting of goals and budgets,
which are not necessary since this proposed rule requires a full cost of service review
prior to the approval of any new changes in its rates or fees. RRI stated that the long run
planning exercise is superfluous in light of the cost of service ratemaking requirements
and its elimination would help reduce costs.
subsection should be deleted.
Therefore, RRI believes this entire
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ORDER
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ERCOT disagreed with RRI's comments. ERCOT stated that long-term planning and
public disclosure of that planning is a valuable tool for ERCOT. ERCOT asserted that
the costs of compliance with this portion of the rule would not be significant and that the
benefits to be obtained would be worthwhile. While it supported the provision, ERCOT
also urged the commission to make certain changes in the language and to make it clear
that an ERCOT fee case was not the appropriate forum in which to debate the items
included in the long-term plan. ERCOT asserted that the language was unclear and
inconsistent with ERCOT terminology in some aspects. ERCOT urged the commission
to revise the language to more clearly state its obligations concerning the long-term
operations plan and provided language to accomplish that result.
Commission response
The commission disagrees with RRI's assertion that a long-term operations plan is far too
costly to warrant and that the entire subsection should be deleted. The commission
agrees with ERCOT that the long-term operations plan presents important information for
both the commission and any persons interested in the amount and timing of ERCOT fee
changes. Therefore, the commission declines to eliminate the requirement from the rule.
The commission agrees with ERCOT's comments that the language in the rule may be
unclear. In order to clarify the rule, the commission accepts the revisions proposed by
ERCOT.
PROJECT NO. 27736
ORDER
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§25.363 ERCOT Fees and Other Rates
§25.363(b), System of accounts and reporting
Chart of accounts
ERCOT objected to the requirement that it maintain accounts reflecting all expenses in a
manner that allows the commission to determine the costs for each activity that is subject
to a separate fee. ERCOT argued that, with the exception of its System Administrative
Fee, WAN Fee and non-ERCOT LSE Fee, its other fees are insignificant. ERCOT does
not currently track the costs associated with those fees and the cost of creating systems to
separately account for such costs would outweigh any benefit. ERCOT also disputed the
need for a rule provision requiring it to obtain commission approval before implementing
new or modified accounts. ERCOT stated that approval of the accounts will be done in
the commission project related to adopting a form for the fee-filing application. For these
reasons, ERCOT urged the commission to delete the requirements to functionalize its
accounts by fee and to obtain commission approval before modifying its accounts.
Commission response
The commission does not want to add undue costs to the ERCOT budget. Nevertheless,
the commission needs the ability to match ERCOT's revenues with its costs to determine
if excess funds are available for other uses. The commission is not requiring ERCOT to
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ORDER
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fully unbundle its fees, but to provide information so that it can track revenue with broad
cost causation and allocation. The commission agrees with ERCOT that all fees other
than the System Administrative Fee, the WAN Fee and the non-ERCOT LSE Fee are not
significant revenue generators. However, the costs that the System Administrative Fee
covers are significant and need to be reported in sufficient amount of detail to determine
reasonableness. That same level of detail is not necessary for other fees and the rule
should not be interpreted to require such detail.
The commission believes that implicit in any review of revenues and costs is the ability
to make year-to-year comparisons.
However, the commission also understands that
modifications and creation of accounts is necessary as circumstances warrant, and
therefore believes it can review and approve account changes in any subsequent fee case.
Thus, the commission concurs that the proposed rule does not need to separately require
ERCOT to seek and obtain commission approval prior to implementing new or modified
accounts outside of the approval process for the fee-filing package and has revised the
language used in the rule. The revised language allows ERCOT to make some changes
but provides that ERCOT may not change its chart of accounts to be any less detailed
than that required in the fee-filing package without prior commission approval.
Long-term operations plan
ERCOT suggested modifying the rule to avoid an implication that the commission would
approve the long-term plan required by §25.362(b).
PROJECT NO. 27736
ORDER
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Commission response
The commission agrees with ERCOT's modification of the language describing the longterm operations plan and modifies the rule accordingly.
§25.363(c), Allowable expenses for fees and rates
Future Test Year
ERCOT supported the provisions of the rule allowing it to use a future test year in
determining its fees. ERCOT asserted that, because it is currently undergoing a period of
expansion, the ability to use a future test year enables it to ensure that its fees will
produce revenue that matches its expected costs. ERCOT did not propose any changes to
the rule concerning this topic.
Commission response
The commission notes that the rule requires the use of a historic test year, but allows the
use of a future test year "if ERCOT demonstrates that the scope of its activities and
functions has been expanded by the commission or the market participants, resulting in
higher future costs." The commission agrees with ERCOT that the flexibility to use a
future test year is important during this start-up period, but the commission expects that,
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ORDER
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once ERCOT's operations become more stable, the use of a future test year will become
more rare. ERCOT's comments do not require any changes to the rule.
Allowable expenses
ERCOT stated that it appreciates the provisions in the rule allowing it to recover some
expenses related to charitable contributions and public service announcements.
However, ERCOT felt that the language of the rule was confusing and proposed revisions
to state that the expenses are allowed, rather than stating that they are not disallowed, and
to correct some typographical errors.
Commission response
The commission agrees with ERCOT's suggestion to add clarity to the language of the
rule but declines to adopt the specific language proposed by ERCOT. The commission
believes that the limitations for public service announcements should be kept and has
accepted ERCOT's suggestion to list them as allowed expenses.
However, the
commission does not agree with ERCOT's suggestion to list charitable contributions as
an allowable expense.
The commission finds that, in most instances, charitable
contributions are not "costs" incurred by ERCOT in performing the functions required by
PURA §39.151 and it is not appropriate to allow mandatory fees to be extended for
charitable contributions. Accordingly, the commission is deleting any language that
would indicate that such contributions would automatically be included as allowable
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ORDER
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expenses in setting ERCOT's fees. By not allowing contributions to be included as an
expense, the commission is not preventing or discouraging ERCOT's employees from
making voluntary contributions to charities of their choosing. The commission has also
corrected the typographical errors noted by ERCOT.
The commission is also adding language to subsection (c)(3)(F) of this section to indicate
that an expense will be disallowed if it is not sufficiently supported by the fee-filing
package and accompanying evidence that ERCOT files with its application.
This
requirement is based upon other commission rules that require the submission of a feefiling package and that place the burden of proof on an applicant to support its
application. The language is added to provide an explicit recitation of the requirement
created by those rules and does not add any new substantive requirements.
The new section and amendment are adopted under the Public Utility Regulatory Act,
Texas Utilities Code Annotated §14.002 (Vernon 1998, Supplement 2003) (PURA),
which provides the Public Utility Commission with the authority to make and enforce
rules reasonably required in the exercise of its powers and jurisdiction; and specifically,
PURA §39.151, which grants the commission oversight and review authority over
independent organizations, like ERCOT, and authorizes the commission to establish
reasonable and competitively neutral rates for such organizations.
Cross Reference to Statutes: Public Utility Regulatory Act §14.002 and §39.151.
PROJECT NO. 27736
§25.362.
(a) ORDER PAGE 11 OF 28
Electric Reliability Council of Texas (ERCOT) Governance.
Purpose. This section provides standards for the operation of an independent
organization within the ERCOT region.
(b) Application. This section applies to ERCOT or any other organization within the
ERCOT region that qualifies as an independent organization under the Public
Utility Regulatory Act (PURA) §39.151.
(c) Adoption of rules by ERCOT and commission review. ERCOT shall adopt
and comply with procedures concerning the adoption and revision of protocols
and procedures that constitute statements of general policy and that have an
impact on the governance of the organization or on reliability, settlement,
customer registration, or access to the transmission system.
(1) The procedures shall provide for advance notice to interested persons, an
opportunity to file written comments or participate in public discussions,
and, in the case of new protocols or revisions to protocols, an evaluation
by ERCOT of the costs and benefits to the organization and the operation
of electricity markets.
(2) The commission shall process requests for review of ERCOT protocols,
procedures, and decisions in accordance with §22.251 of this title (relating
to Review of Electric Reliability Council of Texas (ERCOT) Conduct).
PROJECT NO. 27736
(d) Access to meetings.
ORDER PAGE 12 OF 28
ERCOT shall adopt and comply with procedures for
providing access to its meetings to market participants and the general public.
These procedures shall include provisions on advance notice of the time, place,
and topics to be discussed during open and closed portions of the meetings, and
making and retaining a record of the meetings. Records of meetings of the board
of directors shall be retained permanently, and ERCOT shall establish reasonable
retention periods, but not less than five years, for records of other meetings.
(e) Access to information. This subsection governs access to information held by
ERCOT and access to information held by the commission that it receives from
ERCOT.
(1) ERCOT shall adopt and comply with procedures that allow persons to
request and obtain access to records that ERCOT has or has access to
relating to the governance and budget of the organization, market
operation, reliability, settlement, customer registration, and access to the
transmission system.
ERCOT shall make these procedures publicly
available. Information that is available for public disclosure pursuant to
ERCOT procedures shall normally be provided within ten business days
of the receipt of a request for the information. If a response requires more
than ten business days, ERCOT will notify the requester of the expected
delay and the anticipated date that the documents may be available.
ERCOT's procedures regarding access to records shall be consistent with
this section.
PROJECT NO. 27736
ORDER PAGE 13 OF 28
(A) Information submitted to or collected by ERCOT pursuant to
requirements of the protocols or operating guides shall be
protected from public disclosure only if it is designated as
Protected Information pursuant to the Protocols, except as
otherwise provided in this subsection.
(B) On its own motion or the petition of an affected party, including
commission staff, the commission may, after providing reasonable
notice to affected parties and an opportunity to be heard, amend
the definition of "Protected Information" or the designation of
"Items Not Considered Protected Information" under the ERCOT
Protocols. In considering such an amendment, the commission
may review the specific information under consideration or a
general description of such information.
(C) The procedures adopted by ERCOT under this subsection shall
include provisions for promptly responding to a request from the
commission or commission staff for information that ERCOT
collects, creates or maintains in order to provide the commission
access to information that the commission or commission staff
determines is necessary to assess market power and the
development and operation of competitive wholesale and retail
markets; to evaluate possible violations of laws, rules, protocols, or
codes of conduct; or to carry out the commission's responsibilities
for oversight of ERCOT.
PROJECT NO. 27736
ORDER PAGE 14 OF 28
(2) Commission employees, consultants, agents, and attorneys who have
access to Protected Information pursuant to this section shall not disclose
such information except as provided in this subsection and in accordance
with the provisions of the Texas Public Information Act (TPIA).
(A) If the commission receives from a member of the Texas
Legislature a request for information that the commission has or
has access to that is designated as "Protected Information" under
the ERCOT Protocols, the commission shall provide the
information to the requestor pursuant to the provisions of Texas
Government Code Annotated §552.008.
If permitted by the
requesting member of the Texas Legislature the commission shall
notify ERCOT, and, if applicable, the entity that provided the
information to ERCOT, of the existence of the request, the identity
of the requestor, and the substance of the request.
(B) If the commission receives a request for information that the
commission has or has access to that has been designated as
Protected Information under the Protocols the commission shall
make a good faith effort to provide notice of the request to the
affected market participant and ERCOT within three business days
of receipt of the request.
If the third-party provider of the
information objects to the release of the information, the
commission shall offer to facilitate an informal resolution between
the requestor and the third party. If informal resolution of an
PROJECT NO. 27736
ORDER PAGE 15 OF 28
information request is not possible, the commission will process
the request in accordance with the TPIA.
(C) In the absence of a request for information, if the commission staff
seeks to release information that the commission has or has access
to that has been designated as Protected Information under the
Protocols, the commission may determine the validity of the
asserted claim of confidentiality
proceeding.
through a contested-case
In a contested case proceeding conducted by the
commission pursuant to this subsection, the staff, the entity that
provided the information to the commission, and ERCOT will have
an opportunity to present information or comment to the
commission on whether the information is subject to protection
from disclosure under the TPIA.
(D) In connection with any challenge to the confidentiality of
information under subparagraph (C) of this paragraph, any person
who asserts a claim of confidentiality with respect to the
information must, at a minimum, state in writing the specific
reasons why the information is subject to protection from public
disclosure and provide legal authority in support of such assertion.
(E) Except as otherwise provided in subparagraph (A) of this
paragraph, if either the commission or the attorney general
determines that the disclosure of information designated as
Protected Information under the ERCOT Protocols is appropriate,
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ORDER PAGE 16 OF 28
the commission shall provide notice to the entity that provided the
information and to ERCOT at least three business days prior to the
disclosure of the Protected Information (or, in the case of a valid
and enforceable order of a state or federal court of competent
jurisdiction
specifically
requiring
disclosure
of
Protected
Information earlier than within three business days, prior to such
disclosure).
(f) Conflicts of interest. ERCOT shall adopt policies to ensure that its operations
are not affected by conflicts of interests relating to its employees' outside
employment and financial interests and its contractors' relationships with other
businesses. These policies shall include an obligation to protect confidential
information obtained by virtue of employment or a business relationship with
ERCOT.
(g) Qualifications for membership on governing board. ERCOT shall establish
and implement criteria for an individual to serve as a member of its governing
board, procedures to determine whether an individual meets these criteria, and
procedures for removal of an individual from service if the individual ceases to
meet the criteria.
(1) The qualification criteria shall include:
(A) Definitions of the market sectors;
PROJECT NO. 27736
(B) ORDER PAGE 17 OF 28
Levels of activity in the electricity business in the ERCOT region
that an organization in a market sector must meet, in order for a
representative of the organization to serve as a member of the
governing board;
(C) Standards of good standing that an organization must meet, in
order for a representative of the organization to serve as a member
of the governing board; and
(D) Standards of good standing that an individual must meet, in order
for the individual to serve as a member of the governing board.
(2) The procedures for removal of a member from service on the governing
board shall include:
(A) Procedures for determining whether an organization or individual
meets the criteria adopted under paragraph (1) of this subsection;
and
(B) Procedures for the removal of an individual from the governing
board if the individual or the organization that the individual
represents no longer meets the criteria adopted under paragraph (1)
of this subsection.
(3)
The procedures adopted under paragraph (2) of this subsection shall:
(A) Permit any interested party to present information that relates to
whether an individual or organization meets the criteria specified
in paragraph (1) of this subsection; and
PROJECT NO. 27736
ORDER PAGE 18 OF 28
(B) Specify how decisions concerning the qualification of an
individual will be made.
(4) A decision concerning an individual or organization's qualification is
subject to review by the commission.
(h) Required reports.
(1) Annual report. Beginning with the 2002 calendar year, ERCOT shall file
an annual report with the commission, not later than 120 days after the end
of the year. The annual report shall include:
(A) An independent audit of ERCOT's financial statements for the
report year;
(B) A schedule comparing actual revenues and costs to budgeted
revenues and costs for the report year and a schedule showing the
variance between actual and budgeted revenues and costs;
(C) An independent audit of ERCOT's market operation for the report
year;
(2) (D) The annual board-approved budget; and
(E) Any other information the commission may deem necessary.
Quarterly reports. ERCOT shall file quarterly reports no later than 45
days after the end of each quarter, which shall include:
(A) All internal audit reports that were produced during the reporting
quarter;
PROJECT NO. 27736
ORDER PAGE 19 OF 28
(B) A report on performance measures, as prescribed by the
commission;
(C) By account item as established in the fee-filing package prescribed
by the commission under §22.252 of this title (relating to
Procedures for Approval of ERCOT Fees and Rates) a report of:
(i)
ERCOT fees and other rates, funds allocated, funds
encumbered, and funds expended;
(ii)
An explanation for expenditures deviating from the original
funding allocation for the particular account item;
(iii)
For the report covering the fourth quarter of ERCOT's
fiscal year, a detailed explanation of how unexpended
funds will be expended in the subsequent year; and
(D) (i) Any other information the commission may deem necessary.
Compliance with rules or orders. ERCOT shall inform the commission with as
much advance notice as is practical if ERCOT realizes that it will not be able to
comply with PURA, the commission's substantive rules, or a commission order.
If ERCOT fails to comply with PURA, the commission's substantive rules, or a
commission order, the commission may, after notice and opportunity for hearing,
adopt the measures specified in this subsection or such other measures as it
determines are appropriate.
PROJECT NO. 27736
(1) ORDER PAGE 20 OF 28 The commission may require ERCOT to submit, for commission approval,
a proposal that details the actions ERCOT will undertake to remedy the
non-compliance.
(2) The commission may require ERCOT to begin submitting reports, in a
form and at a frequency determined by the commission, that demonstrate
ERCOT's current performance in the areas of non-compliance.
(3) The commission may require ERCOT to undergo an audit performed by
an appropriate independent third party.
(4) The commission may assess administrative penalties under PURA Chapter
15, Subchapter B.
(5) The commission may suspend or revoke ERCOT's certification under
PURA §39.151(c) or deny a request for change in the terms associated
with such certification.
(6) The imposition of one penalty under this section does not preclude the
imposition of other penalties as appropriate for the instance of noncompliance or related instances of non-compliance.
(7) In assessing penalties, the commission shall consider the following
factors:
(A) Any prior history of non-compliance;
(B) Any efforts to comply with and to enforce the commission's rules;
(C) The nature and degree of economic benefit or harm to any market
participant or electric customer;
PROJECT NO. 27736
ORDER PAGE 21 OF 28
(D) The damages or potential damages resulting from the instance of
non-compliance or related instances of non-compliance;
(E) The likelihood that the penalty will deter future non-compliance;
and
(F) Such other factors deemed appropriate and material to the
particular circumstances of the instance of non-compliance or
related instances of non-compliance.
(8) The commission may initiate a compliance proceeding or other
enforcement proceeding upon its own initiative or after a complaint has
been filed with the commission that alleges that the ERCOT has failed to
comply with PURA, the commission's substantive rules, or a commission
order.
(9) Nothing in this section shall preclude any form of civil relief that may be
available under federal or state law.
(j) Priority of commission rules.
This section supersedes any protocols or
procedures adopted by ERCOT that conflict with the provisions of this section.
The adoption of this section does not affect the validity of any rule or procedure
adopted or any action taken by ERCOT prior to the adoption of this section.
(k) Long-term operations plan. Annually, by October 31st, ERCOT shall file a
long-term operations plan. At a minimum, the long-term operations plan shall
provide the following information:
PROJECT NO. 27736
(1) ORDER PAGE 22 OF 28 A description of ERCOT's roles and responsibilities within the electric
market in Texas, including system reliability, centralized control and
power scheduling, centralized commercial functions, and a description of
how ERCOT's roles and responsibilities relate to the roles and
responsibilities of the transmission and distribution utilities and retail
electric providers;
(2) An overview of the major systems, including both hardware and software,
operated by ERCOT, including descriptions of the functionality provided,
estimates of remaining useful life, estimates of ongoing maintenance and
upgrade costs, and evaluations of the performance of each system;
(3) A description of major capital projects completed in the current budget
year and those expected to be completed in the next budget year, including
an explanation of why each project is needed to assist ERCOT in meeting
its responsibilities;
(4) A schedule summarizing ERCOT's sources and uses of funds for a sixyear period beginning with the last historic calendar year and projections
for the next five calendar years;
(5) Long-term goals for all ERCOT activities;
(6) An evaluation of ERCOT's performance in meeting its responsibilities and
system expectations, as set forth in PURA and the commission rules,
during the current budget year; and
(7) Any other information or activity required by the commission.
PROJECT NO. 27736
ORDER
PAGE 23 OF 28 PROJECT NO. 27736
§25.363.
(a) ORDER PAGE 24 OF 28
ERCOT Fees and Other Rates.
Scope. This section applies to all fees and rates levied or charged by the Electric
Reliability Council of Texas (ERCOT) in its role as an independent organization
under the Public Utility Regulatory Act (PURA) §39.151. Charges for wholesale
market services acquired by ERCOT in accordance with its protocols are not
governed by this section, but may be revised in accordance with §25.362 of this
title (relating to Electric Reliability Council of Texas (ERCOT) Governance).
(1) A fee or rate that was in effect on the effective date of this section shall
remain in effect and shall not be changed without commission approval.
(2) ERCOT must seek and obtain commission approval of any new or
modified rate or fee prior to implementing the new or modified rate or fee.
(b) System of accounts and reporting. For the purpose of accounting and reporting
to the commission, ERCOT shall maintain its books and records in accordance
with Generally Accepted Accounting Principles.
ERCOT shall establish a
standard chart of accounts and employ it consistently from year to year. The
standard chart of accounts shall be used for the purpose of reporting to the
commission and shall be consistent with the fee-filing application approved by
the commission and the long-term operations plan. The accounts shall show all
revenues resulting from the various fees charged by ERCOT and reflect all
expenses in a manner that allows the commission to determine the sources of the
costs incurred for each activity for which a separate fee is charged. ERCOT may
PROJECT NO. 27736
ORDER PAGE 25 OF 28
not change its chart of accounts to be any less detailed than that required in the
fee-filing package without prior commission approval.
(c) Allowable expenses for fees and rates. Fees and rates shall be based upon
ERCOT's cost of performing its required functions as described in PURA
§39.151(a).
To determine the reasonable cost of performing its functions,
ERCOT shall use a historical test year, except that ERCOT may use a future test
year if ERCOT demonstrates that the scope of its activities and functions has been
expanded by the commission or the market participants, resulting in higher future
costs. To determine if the costs are reasonable and necessary, the commission
shall review ERCOT's costs for consistency compared to the ERCOT long-term
operations plan, to costs incurred by market participants and other independent
system operators for similar activities, and to any other information and data
considered appropriate by the commission.
(1) Only those expenses that are reasonable and necessary to carry out the
functions described in PURA §39.151, shall be included in allowable
expenses.
(2) Allowable expenses, to the extent they are reasonable and necessary may
include, but are not limited to the following general categories:
(A) Operating expenses, which include salaries and related benefits,
direct advertising for the specific purpose of recruiting employees,
legal and consulting services, hardware and software maintenance
PROJECT NO. 27736
ORDER PAGE 26 OF 28
and licensing, insurance, employee training and travel, and
depreciation;
(B) Facility and equipment costs, and other long-lived investments;
(C) Debt service (interest plus principal reduction) and other
reasonable and necessary costs of capital to fund investments in
property and facilities, and other capital expenditures that are used
and useful in performing the functions of an independent
organization;
(D) Expenses associated with fees and dues charged by organizations
setting electric or energy business practices and communications
standards (e.g., North American Electric Reliability Council
("NERC"), North American Energy Standards Board ("NAESB"),
and ISO/RTO Council) to which ERCOT is presently a member;
and
(E) Actual expenditures for public service announcements and
community education efforts, provided that the total sum of all
such items allowed in the cost of service shall not exceed 0.05% of
the annual ERCOT revenue requirement or $50,000, whichever is
less.
(3) The following are not allowable as a component of expenses:
(A) Legislative advocacy expenses, whether made directly or
indirectly;
PROJECT NO. 27736
(B) ORDER PAGE 27 OF 28
Funds expended in support of political candidates, movements or
causes;
(C) Funds expended promoting religious causes;
(D) Funds expended in support of or in acquiring membership in
social, recreational, or fraternal clubs or organizations;
(E) Funds expended for advertising, marketing, or other promotions,
which includes, but is not limited to:
(i)
p romotional goods;
(ii) efforts to increase name recognition;
(iii) radio, television, newspaper or other media advertising;
except as otherwise expressly authorized; and
(F) any expenditure found by the commission to be unreasonable,
unnecessary, not in the public interest, or not sufficiently
supported by the fee-filing package and accompanying evidence.
PROJECT NO. 27736
ORDER
PAGE 28 OF 28
This agency hereby certifies that the rule, as adopted, has been reviewed by legal
counsel and found to be a valid exercise of the agency's legal authority. It is therefore
ordered by the Public Utility Commission of Texas that amendments to §25.362, relating
to Electric Reliability Council of Texas (ERCOT) Governance, and new §25.363, relating
to ERCOT Fees and Other Rates, are hereby adopted with changes to the text as
proposed.
ISSUED IN AUSTIN, TEXAS ON THE 13th DAY OF OCTOBER 2003.
PUBLIC UTILITY COMMISSION OF TEXAS
_________________________________________
Rebecca Klein, Chairman
_________________________________________
Julie Parsley, Commissioner
__________________________________________
Paul Hudson, Commissioner
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